What’s in a Name? Redefining Informal Economies

Friday, January 10th, 2014

In mainstream international development circles, there is a lot of debate about the benefits and merit of ‘informal economies’. The informal economy is comprised of people who sell in the streets, work in homes, and underpin economies throughout the developing world. They are the artisans, the domestic workers, the construction workers, the mechanics, the sex workers, the gardeners, the caterers…the list goes on.

The designation ‘informal’ is centered upon naming what the sector is not. Because it isn’t regulated like the formal sector, informal economies don’t directly generate tax revenue. Nevertheless, it is in the informal economy that the poorest of the poor are often able to engage in trade where they are otherwise denied entry.

Personally, I am sick of hearing about the informal economy in these narrow terms.

During my time working with the Self-Employed Women’s Association (SEWA) in Ahmedabad, India, my framework for understanding informal employment began to shift. Founded in 1972 by the legendary civil rights leader, Ela Bhatt, SEWA is one of the largest trade unions in the world with nearly one million members. SEWA’s model of providing cooperative finance and assets for women working in such fields as incense makers and rag pickers has been successfully replicated globally. While working with the artisan and design cooperative at SEWA, I started to understand that the vegetable vendors I saw hawking on the street were not ‘informal’ at all. They were entrepreneurs. They were self-employed women in their own right.

This is a pivotal and often gendered distinction. Framing workers as ‘informal’ versus ‘entrepreneurs’ shifts how we understand where the power lies. A jewelry maker in the United States who sells on Etsy is applauded for having her own business. Yet an artisan in India who sells her goods on the street is framed simply as a woman in poverty working within an informal economy. My time with SEWA helped me understand the power of language when we talk about women’s work, and how international macroeconomic imbalances widen that divide.

This year, while working in Kenya with Soko, a social enterprise working with artisans – the majority of whom are women – I thought back to my time with SEWA. I was conducting an impact evaluation for Soko. I traveled across Nairobi, visiting artisans in their homes and workshops to record their stories. I kept coming back to the same conclusion: artisans are businesspeople. As entrepreneurs and employers, they shared the benefits of their work with the communities around them. As they received orders from clients, they employed girls and mothers in their area, generating work and income for all. By tapping into this micro-entrepreneurial ecosystem and expanding their access to markets, Soko was creating a ripple effect that impacted entire communities.

So what is my role and responsibility in this work?

If I want to support social justice on an international scale, I need to shift my understanding away from the current narrow and gendered concepts of informality. My thinking has evolved through my desire to build relationships based on dignity and mutual respect. Framing people as ‘self-employed’ rather than ‘informal’ is a first step to recognizing the power that lies within communities and workers.

It is this power to transform our own internal cognitive understanding that we begin to influence our external, lived reality so that all workers are valued and included in the larger international development discourses.

Alanna Ford, Contributor Follow Alanna’s writing and work at the intersections of social justice here: www.alannaford.com

Reblogged this on Tiffany's Non-Blog and commented:
Wow! What a great piece. I had definitely considered the implications of this issue before, more as a question of “fine art” versus “primitive art”, but the capitalism angle, for me as a pro-capitalist and feminist, is fascinating! It’s definitely appropriate to celebrate these women who are the backbone of their home economies for their entrepreneurial spirit – and if changing the way economists talk about it can do anything to help, I’m in favor!